8-K/A.........
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TYPE: 8-K/A
SEQUENCE: 1
DESCRIPTION: FORM 8-K/A (AMENDMENT NO. 2)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
FORM 8-KA
AMENDMENT NO. 2 to
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 10, 1998
ENHANCED SERVICES COMPANY, INC.
(Exact Name of Registrant as Specified in Charter)
Colorado 0-24256 76-0462973
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3415 South Sepulveda Boulevard, Suite 500 Los Angeles, California 90034
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (310) 397-3003
1
Item 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
This Amendment is filed to clarify the name of the entity which will
result from the Reorganization described in the Company's Reports on Form 8-K
filed on September 28, 1998 and November 16, 1998. As reported in those filings,
pursuant to the terms of a Securities Acquisition and Reorganization Agreement
("Reorganization Agreement") dated as of September 9, 1998, in transactions
implemented between September 10, 1998 and September 16, 1998, Enhanced Services
Company, Inc. ("Enhanced" or the "Company") and Zulu-tek, Inc. ("Zulu-tek") have
undertaken a series of transactions (the "Reorganization") in which Enhanced
acquired all of the assets and liabilities of Zulu-tek.
As described in the previous Reports on Form 8-K, in exchange therefor,
Enhanced (i) issued to Zulu-tek 520,000 shares of 1998(B) Preferred Stock , (ii)
agreed to issue up to 10,209 shares of 1998(C) Preferred Stock to replace the
Series C Preferred Stock held by Softbank Holdings, Inc., OzEmail Limited and
certain other former shareholders of Zulu Media, Inc. (formerly Softbank
Interactive Marketing, Inc.), and (iii) agreed to provide up to $374,800 for
Zulu-tek to fund the repurchase of some or all of Zulu-tek's outstanding
Series(A) Preferred Stock.
Also, as previously described, the 1998(B) Preferred Stock is
convertible into 5.2 million shares of the Company's Common Stock, but only
after such conversion is approved by the shareholders of the Company, at an
Annual Meeting. If the transaction is approved, Zulu-tek will be liquidated and
the 5.2 million shares of the Company's Common Stock will be distributed to the
Zulu-tek shareholders.
At that Annual Meeting, the shareholders of Enhanced will also be asked
to approve the transfer of the Company's state of incorporation to Delaware
through a merger with ZuluGroup.com, Ltd., a Delaware corporation newly
organized by the Company to implement the reincorporation. For reference, the
Pro Forma Financial Information contained in this Report refers to
"ZuluGroup.com" as the consolidated entity which will result from the
combination of the Company and Zulu-tek.
Zulu-tek (OTC-ZULU), formerly OTC-NETZ and formerly known as Netmaster
Group, Inc., has continued to trade as an independent entity and will continue
to trade as an independent entity until it is liquidated (which liquidation is
contingent upon approval of the conversion of the 1998(B) Preferred Stock) as
part of the Reorganization.
2
Reference is made to the Company's Report on Form 8-K filed on
September 28, 1998 for further details of the transaction, as amended by the
Form 8-KA filed on November 16, 1998. This Report on Form 8-KA is filed to
provide the financial information required by Item 7 of Form 8-K (see below).
Item 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
Item 5. OTHER EVENTS.
Not applicable.
Item 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) and (b) The financial statements and pro forma financial
information required to give effect to the transactions described
in Item 2 above are annexed as Appendix 1.
Item 8. CHANGE IN FISCAL YEAR.
Not applicable.
Item 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Enhanced Services Company, Inc.
Registrant
Date: December 29, 1998 By: /s/ Robert C. Smith
-----------------------------
Robert C. Smith, Treasurer
(Chief Financial Officer and
Authorized Signatory)
4
APPENDIX A-1
ZuluGroup.com, Ltd.
Unaudited Pro Forma Balance Sheet
August 31, 1998
Enhanced
Services ZULUGROUP.COM*
Zulu tek, Inc. Company, Inc. Acquisition/ Equity Adjustments CONSOLIDATED
------------------------------ ------------------------------- --------------
Assets
Current Assets
Cash $ 21,770 $ 63,059 $ 84,829
Accounts receivable, net 251,726 585,178 836,904
Inventory 254,826 254,826
Intercompany receivable 302,853 2,333,249 1 (2,636,102) 0
Other current assets 35,282 177,391 212,673
------------ ------------ ------------
Total current assets 611,630 3,413,703 $ 1,389,231
Property and equipment, net of
accumulated depreciation 1,540,248 108,661 1,648,909
Investment in Zulu tek, Inc. 4,045,000 2 (4,045,000) 0
Goodwill - Echo/Zulu Media 14,122,418 3 2,991,429 2 2,757,968 17,113,847
Intangible Technology 4 (2,757,968)
Other assets 150,755 19,708 170,463
------------ ------------ ------------
Total assets $ 16,425,051 $ 7,587,072 $ 20,322,450
============ ============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 7,385,107 $ 1,127,895 (356,139) $ 8,156,863
Notes payable 908,500 908,500
Repurchase of Preferred Stock 7 374,800 374,800
Due to Related parties 2,279,963 1 (2,279,963) (0)
Other current liabilities 106,945 106,945
Deferred Revenue 550,199 550,199
============ ============ ============
Total current liabilities 10,215,269 2,143,340 $ 10,097,306
Notes payable 2,463,610 2,266,249 4,729,859
Minority Interest 3 801,338 801,338
Series C Redeemable Preferred 10,209,000 9 (10,209,000) 0
============ ============ ============
Total liabilities $ 22,887,879 $ 4,409,589 $ 15,628,504
Stockholders' Equity
Common stock 10 (27,348)
52,000 3,208 2 (12,000) 3 (3,208) 12,652
Convertible Debentures 1998 5
Preferred Stock (ESC) 3,000,008 3 (3,000,000) 8
Series A/B Preferred (Zulu) 3,374,800 8 (3,000,000) 7 (374,800) 0
Series C Preferred 1998 9 10,209,000 10,209,000
Series D Preferred 10,000 2 (10,000) 0
5,170,806 3 (4,370,814)10 27,348
Additional paid in capital 3 4,567,567 2 (1,265,032) 4,371,907
4 (2,757,968)
3,000,000
Retained Earnings (9,899,628) (4,996,539) 3 4,996,539 (9,899,628)
------------ ------------ ------------
Total stockholder's equity $ 6,462,827 $ 3,177,483 $ 4,693,940
============ ============ ============
Total Liabilities & Stockholders' Equity $ 16,425,052 $ 7,587,072 $ 20,322,444
============ ============ ============
APPENDIX A-2
ZuluGroup.com, Ltd.
Unaudited Pro Forma Statement of Operations
For the 8 Months ended
August 31, 1998
DISCONTINUED CONTINUING
ENHANCED ZULU-MEDIA ADJUSTMENTS CONSOLIDATED OPERATIONS OPERATIONS
------------ ------------ ------------ ------------ ------------ ------------
Gross sales volume $ 2,675,226 $ 17,519,059 $ 20,194,285 $ 305,921 $ 19,888,364
============ ============ ============ ============ ============
Net sales 2,675,226 1,719,553 4,394,779 305,921 4,088,858
Cost of sales 1,113,331 530,069 1,643,400 103,387 1,540,013
------------ ------------ ------------ ------------ ------------
Gross profit 1,561,895 1,189,484 2,751,379 202,534 2,548,845
Operating expenses 3,311,293 4,823,298 8,134,591 622,362 7,512,229
Goodwill amortization 710,304 (2) 2,187,901 2,187,901 2,187,901
(1) (710,304)
Net operating loss $ (2,459,702) $ (3,633,814) $ (7,571,113) $ (419,828) $ (7,151,285)
------------ ------------ ------------ ------------ ------------
Other Income(Expense) (729,414) $ (729,414) (292,004) (437,410)
------------ ------------ ------------ ------------ ------------
Net loss $ (3,189,116) $ (3,633,814) $ (8,300,527) $ (711,832) $ (7,588,695)
============ ------------ ============ ============ ============
(3)
* In connection with the Reorganization, shareholders will be asked to approve
the transfer of the Company's state of incorporation to Delaware through a
Merger with a newly organized entity and a change of name to "ZuluGroup.com,
Ltd." The pro forma financial information presents the resulting entity under
the name "ZuluGroup.com."
Note (1) Amortization of goodwill of the discontinued operation of NB
Engineering has been eliminated in both the 1997 and 1998 pro forma statement of
operations.
Note (2) Goodwill created by the combined entities, if approved by the
shareholders, has been presented in both the 1997 and 1998 pro forma statement
of operations. The estimated life of 5 years was used in the calculation.
Note (3) NB Engineering, Inc., a subsidiary of Enhanced Services Company was
discontinued on May 31, 1998 and its operations have been eliminated in both the
1997 and 1998 proforma statement of operations.
APPENDIX A-3
ZuluGroup.com, Ltd.
Unaudited Pro Forma Statement of Operations
For the 12 Months ended
December 31, 1997
DISCONTINUED CONTINUING
ESVS ZULU-MEDIA ADJUSTMENTS CONSOLIDATED OPERATIONS OPERATIONS
------------ ------------ ------------ ------------ ------------ ------------
Gross sales volume $ 5,689,074 $ 38,218,566 $ 43,907,640 $ 1,240,761 $ 42,666,879
============ ============ ============ ============ ============
Net sales 5,689,074 6,370,634 12,059,708 1,240,761 10,818,947
Cost of sales 2,529,222 6,250,711 8,779,933 167,096 8,612,837
------------ ------------ ------------ ------------ ------------
Gross profit 3,159,852 119,923 3,279,775 1,073,665 2,206,110
Operating expenses 4,627,984 18,031,286 22,659,270 1,776,042 20,883,228
Goodwill amortization 157,848 9,516,096 (2) 3,281,851 3,281,851 3,281,851
(1) (9,673,944)
------------ ------------ ------------ ------------ ------------
Net operating loss $ (1,625,980) $(27,427,459) $(22,661,346) $ (702,377) $(21,958,969)
------------ ------------ ------------ ------------ ------------
Other Income(Expense) 629,315 629,315 629,315
------------ ------------ ------------ ------------ ------------
Net loss $ (996,665) $(27,427,459) $(22,032,031) $ (702,377) $(21,329,654)
============ ============ ============ ============ ============
(3)
(See notes on Appendix A-2)
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